The New Digital Money Platform Offers Stable Fiat Transfers over the Blockchain and Decentralised ‘Kickstarter’-style Crowdfunding
Bitcoin and the broader blockchain technology that underpins it have attracted enormous interest from the financial services sector and governments, who recognise the benefits of recording information on a distributed ledger. To date, however, bitcoin itself has seen limited adoption. Despite its promise of borderless, low-cost transactions, one of the reasons for this is that bitcoin as a currency is volatile: it can gain or lose several percent of its value in a single day, making it a poor store of value and raising barriers to its adoption in, for example, the $600 billion remittance market. Its status outside the banking system has raised concerns about money laundering and crime, meaning that financial organisations are wary about engaging directly with bitcoin. Instead, they are increasingly researching closed or permissioned ledgers, which offer some of the benefits but are unlikely to be of use to the world’s 2.5 billion unbanked or underbanked individuals.
Banking Gateways, Blockchain Transfers
WAVES has taken a different approach to most existing cryptocurrency platforms. It is designed to allow transfers of fiat currencies such as USD, EUR, CNY and GBP – as well as digital ones like bitcoin – over the blockchain. Tokens that represent these currencies are created by trusted gateways, typically banks, financial businesses and other companies. These tokens can be moved between users anywhere in the world, quickly and at extremely low cost, thanks to the efficiencies of the blockchain. They can then be cashed back out into the regular financial system via the same gateways.
This approach means that financial organisations can maintain their compliance, because they are responsible for KYC/AML (Know Your Customer/Anti-Money Laundering) regulations, according to jurisdiction, while still accessing the speed, cost and transparency advantages the blockchain offers. End users, meanwhile, can move money around freely without worrying about volatility, and only registering their personal details when they want to move money back out of the blockchain. Thus WAVES combines the full decentralisation, independence and resilience of a cryptocurrency network, with appropriate levels of compliance required by regulators.
A New Twist on Crowdfunding
As well as remittance, the ability to send fiat money over the blockchain opens the way for decentralised crowdfunding efforts, with a series of added benefits. Money can be crowdsourced but returned automatically to investors if a minimum total is not met, without reliance on a single administrator; tokens representing a stake in a new project can be traded on secondary markets before launch, allowing holders to exit their investment if they need to.
WAVES itself was created through such a crowdfunding effort. Instead of seeking VC or private investment, WAVES aimed from the start to build a grassroots movement of users, testers and backers. 5,790 people invested a total of 29,634 bitcoins with a current market value of almost $16 million to fund development and marketing – making WAVES the sixth largest crowdfunded project ever. 100 million WAVES tokens, the ‘fuel’ for the platform, were distributed to investors after the crowdfund. Because these tokens are required for all operations on the platform, investors hope to profit from the demand for these tokens as adoption grows. Further features, to be implemented later this year, include a decentralised exchange – on which currencies can be bought and sold – and a voting system.
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